CannaPharmaRx Revenue Soars 262% Amid Widening Losses, CTO Concerns

TL;DR

**CannaPharmaRx is a high-risk gamble: revenue is up, but a widening loss, a Canadian trading ban, and no insurance make it a hard pass for now.**

AI Summary

CANNAPHARMARX, INC. reported a significant increase in revenue for the nine months ended September 30, 2025, reaching $1,223,533, up from $338,003 in the prior year, representing a 262% increase. Despite this revenue growth, the company's net loss widened to $3,581,863 for the nine months ended September 30, 2025, compared to a net loss of $6,164,948 in the same period of 2024. The gross loss also increased to $1,563,817 from $1,244,023. Key business changes include the addition of one growing room to its Cremona, Alberta cannabis facility, bringing the total to six operational growing rooms. The company faces significant risks, including a Cease Trade Order (CTO) issued by the British Columbia Securities Commission in 2023, restricting securities trading in Canada, and the lapse of its insurance coverage since early 2024, exposing it to uninsured liabilities. Strategic outlook involves increasing facility capacity to operate all 10 growing rooms and a second drying and packing room over the next one to two years, alongside efforts to lift the CTO.

Why It Matters

For investors, CannaPharmaRx's substantial revenue growth of 262% is a positive signal of market penetration in the Canadian cannabis sector, but this is overshadowed by a widening net loss and a precarious financial position. The Cease Trade Order (CTO) in Canada severely limits liquidity and access to capital, directly impacting investor confidence and the company's ability to fund operations or expansion. The lapse in insurance coverage creates significant unmitigated risk for employees, customers, and the company's assets, potentially leading to substantial liabilities that could further strain its already challenged balance sheet. In a competitive cannabis market, these operational and regulatory hurdles could hinder CannaPharmaRx's ability to scale and compete effectively against better-capitalized and compliant rivals.

Risk Assessment

Risk Level: high — The company faces a high risk level due to a Cease Trade Order (CTO) from the British Columbia Securities Commission, which restricts trading in its securities in Canada and hinders capital raising. Furthermore, CANNAPHARMARX, INC. has not paid insurance premiums since early 2024, resulting in lapsed coverage and potential exposure to uninsured claims for damages and other expenses, as explicitly stated in Note 1.

Analyst Insight

Investors should avoid CANNAPHARMARX, INC. until the Cease Trade Order is lifted and the company secures adequate insurance coverage. The current financial instability, coupled with regulatory restrictions and unmitigated operational risks, makes it an unsuitable investment for all but the most speculative portfolios.

Financial Highlights

revenue

$1,223,533

net Income

$(3,581,863)

cash Position

$927

revenue Growth

+262%

Key Numbers

• $1,223,533 — Revenue for nine months ended Sept 30, 2025 (Increased from $338,003 in 2024, a 262% increase)
• $(3,581,863) — Net loss for nine months ended Sept 30, 2025 (Widened from $(6,164,948) in 2024)
• $(1,563,817) — Gross loss for nine months ended Sept 30, 2025 (Increased from $(1,244,023) in 2024)
• $927 — Cash at September 30, 2025 (Decreased from $2,156 at December 31, 2024, indicating severe liquidity issues)
• $28,480,524 — Total current liabilities at September 30, 2025 (Increased from $25,752,496 at December 31, 2024)
• 662,501,405 — Common shares outstanding as of November 14, 2025 (High share count for a company with significant losses)
• $1,506,292 — Loss on impairment of inventory for nine months ended Sept 30, 2025 (Included in cost of goods sold, indicating inventory valuation challenges)
• $11,885,572 — Current portion of loans payable to related parties at September 30, 2025 (Significantly increased from $462,818 at December 31, 2024, highlighting reliance on related party financing)

Key Players & Entities

• CANNAPHARMARX, INC. (company) — issuer of the 10-Q filing
• British Columbia Securities Commission (regulator) — issued a Cease Trade Order against the company
• Formosa Mountain Ltd. (company) — landlord for the Cremona, Alberta facility
• Health Canada (regulator) — issued operating license to the company
• Canada Revenue Agency (regulator) — issued cannabis license to the company
• FASB (regulator) — issued accounting standard updates
• CannaPharmaRX Canada Corp. (company) — wholly owned subsidiary
• Alternative Medical Solutions Inc. (company) — wholly owned subsidiary
• 2323414 Alberta Ltd. (company) — wholly owned subsidiary

FAQ

Risk Factors

• Cease Trade Order (CTO) [high — regulatory]: A Cease Trade Order was issued by the British Columbia Securities Commission in 2023, significantly restricting the trading of the company's securities in Canada. Efforts to lift this order are ongoing but have not yet been successful, impacting liquidity and investor access.
• Severe Liquidity Constraints [high — financial]: Cash position has dwindled to $927 as of September 30, 2025, a sharp decrease from $2,156 at the end of 2024. This, coupled with a substantial increase in current liabilities to $28,480,524, indicates a critical need for financing to meet operational obligations.
• Lapsed Insurance Coverage [high — operational]: The company's insurance coverage has lapsed since early 2024. This exposes CANNAPHARMARX, INC. to significant uninsured liabilities, increasing financial risk in the event of unforeseen incidents or claims.
• Reliance on Related Party Financing [medium — financial]: The current portion of loans payable to related parties has surged to $11,885,572 as of September 30, 2025, from $462,818 at December 31, 2024. This highlights a heavy dependence on related parties for funding, which may not be sustainable or on market terms.
• Inventory Valuation Challenges [medium — operational]: A loss on impairment of inventory of $1,506,292 was recorded for the nine months ended September 30, 2025. This indicates potential issues with inventory management, valuation, or marketability, impacting cost of goods sold.
• Widening Net and Gross Losses [medium — financial]: Despite significant revenue growth, the net loss widened to $3,581,863 and gross loss increased to $1,563,817 for the nine months ended September 30, 2025. This suggests that cost of goods sold and operating expenses are not being managed effectively relative to revenue.

Industry Context

The cannabis industry continues to evolve with increasing competition and regulatory scrutiny. Companies are focused on scaling operations, improving cultivation efficiency, and navigating complex market access. However, many smaller players struggle with profitability and access to capital, especially those facing regulatory hurdles or operational challenges.

Regulatory Implications

The Cease Trade Order from the British Columbia Securities Commission is a significant regulatory impediment, preventing normal trading of CPMD's securities. The lapse in insurance coverage also presents a critical compliance and financial risk, exposing the company to potential uninsured liabilities.

What Investors Should Do

1. Monitor progress on lifting the Cease Trade Order, as this is critical for any potential liquidity or future financing.
2. Assess the company's ability to secure sustainable financing beyond related-party loans, given the extremely low cash balance.
3. Evaluate the operational plan to increase facility capacity against the backdrop of current financial distress and widening losses.
4. Understand the terms and conditions of related party loans and their potential impact on future financial flexibility.

Glossary

Cease Trade Order (CTO)

An order issued by a securities regulatory authority that prohibits a company from trading its securities. (CPMD is subject to a CTO, severely limiting its ability to raise capital and trade its shares.)

Loss on impairment of inventory

A charge taken when the carrying value of inventory on the balance sheet exceeds its net realizable value. (Indicates that the company's inventory is overvalued or has lost value, impacting profitability.)

Related parties

Entities or individuals that have the ability to control or significantly influence the financial or operating decisions of another entity. (CPMD relies heavily on loans from related parties, raising questions about the terms and sustainability of this financing.)

Year-Over-Year Comparison

CANNAPHARMARX, INC. has demonstrated substantial revenue growth of 262% for the nine months ended September 30, 2025, reaching $1,223,533. However, this top-line expansion has not translated into improved profitability, as both gross loss and net loss have widened. The company's liquidity position has severely deteriorated, with cash falling to $927, while current liabilities have increased. New risks have emerged, including lapsed insurance coverage, compounding existing challenges like the Cease Trade Order and reliance on related party financing.

Key Financial Figures

• $90,979 — he lease payments were changed from CAD $90,979 to CAD $125,000 per month for the remai
• $125,000 — ts were changed from CAD $90,979 to CAD $125,000 per month for the remainder of the leas

Filing Documents

• canna_10q.htm (10-Q) — 1271KB
• canna_ex311.htm (EX-31.1) — 13KB
• canna_ex312.htm (EX-31.2) — 13KB
• canna_ex32.htm (EX-32) — 5KB
• 0001654954-25-013083.txt ( ) — 6201KB
• isdr-20250930.xsd (EX-101.SCH) — 73KB
• isdr-20250930_lab.xml (EX-101.LAB) — 349KB
• isdr-20250930_cal.xml (EX-101.CAL) — 57KB
• isdr-20250930_pre.xml (EX-101.PRE) — 312KB
• isdr-20250930_def.xml (EX-101.DEF) — 192KB
• canna_10q_htm.xml (XML) — 1038KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1

Financial Statements (unaudited)

Financial Statements (unaudited) 3 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation

Management's Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation 28 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 40 Item 4

Controls and Procedures

Controls and Procedures 40

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 42 Item 1A

Risk Factors

Risk Factors 43 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 43 Item 3 Defaults Upon Senior Securities 43 Item 4 Mine Safety Disclosures 43 Item 5 Other Information 43 Item 6 Exhibits 44

Signatures

Signatures 45 2 Table of Contents CANNAPHARMARX, INC. CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS September 30, 2025 (Unaudited) December 31, 2024 ASSETS Current assets Cash $ 927 $ 2,156 Goods and services tax receivable 17,628 18,707 Accounts receivable 588,393 1,747 Inventory 863,807 996,250 Total current assets 1,470,755 1,018,860 Non-current assets Equipment, net 123,333 137,237 Right-of-use building, net 5,504,692 5,161,473 Investments 4,518,127 4,518,127 Total assets $ 11,616,907 $ 10,835,697 LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities Accounts payable and accrued liabilities $ 10,189,279 $ 9,276,299 Accrued interest 1,522,539 2,495,337 Notes payable 478,604 6,678,389 Convertible notes 1,017,003 1,298,114 Derivative conversion feature 556,755 1,159,324 Loans payable to related parties, current portion 11,885,572 462,818 Royalty payable 287,035 - Liability for right-of-use building, current portion 985,027 728,206 Obligation to issue shares 1,558,710 3,654,009 Total current liabilities 28,480,524 25,752,496 Non-current liability Loans payable to related parties 679,397 - Liability for right-of-use building 4,973,729 4,892,838 Total liabilities $ 34,133,650 $ 30,645,334 SHAREHOLDERS' DEFICIT Preferred shares series A, $ 1.00 par value, 100,000 shares authorized, 74,416 issued and outstanding as at September 30, 2025 and December 31, 2024 $ 74,416 $ 74,416 Preferred shares series B, $ 1.00 par value, 3,000,000 shares authorized, 455,000 shares issued and outstanding as at September 30, 2025 and December 31, 2024 455,000 455,000 Preferred shares series C, $ 1.00 par value, 100,000 shares authorized, 100,000 shares issued and outstanding as at September 30, 2025 and December 31, 2024 100,000 100,000 Common shares, $ 0.0001 par value; 5,000,000,000 shares authorized, 662,501,405 issued and

View Full Filing

View this 10-Q filing on SEC EDGAR